📂 Debt Management
Snowball vs. Avalanche Method: Which to choose to get out of debt
💡 Quick Tip
We compare the two most effective strategies to eliminate debt. Find out if you should prioritize psychological victory (Snowball) or mathematical interest savings (Avalanche).
Ad Slot (Auto-refresh 60s)
The challenge of debt
Being in debt is like running with a backpack of rocks. You need a systematic plan.
Snowball Method (Psychology first)
Order debts from smallest to largest balance. Pay the minimum on all and attack the smallest one with extra cash.
- Pro: Quick wins keep you motivated.
Avalanche Method (Math first)
Order debts from highest to lowest interest rate. Attack the one with the highest interest first.
- Pro: You save more money in the long run.
📊 Practical Example
Practical example with real numbers
Debts: 1. Credit Card €800 (20%), 2. Personal Loan €3,000 (10%), 3. Car €1,200 (5%).
- Snowball: Attack Card first, then Car, then Loan.
- Avalanche: Attack Card first, then Loan, then Car.
In this case, both start with the card, but Avalanche saves more on the €3,000 loan later.
